How Storm8 can score millions of mobile game downloads with zero marketing cost (interview)

Perry Tam wasn’t a seasoned game developer when he co-founded Storm8, a mobile social game developer, in March 2009. He was a Facebook platform developer who worked on payment technology, but he could see that it was turning into a real game platform. Then the iPhone came out, and Storm8 jumped on the opportunity to become a “mobile first” game company.

Now Storm8 has stolen a march on a lot of rivals, reaching more than 300 million downloads and more than 100 million users. Each day, more than 6 million people play a Storm8 game (that figure is up 20 percent from the prior quarter). And the company leads in role-playing games on iOS (Apple iPad, iPod Touch, and iPhone) and Android. Its hit titles include World War, Racing Live,Pets Live, iMobsters, and Vampires Live from Storm8. It also has a second studio, Team Lava, that has created Bakery Story, Restaurant Story, City Story, Farm Story and Fashion Story. The company has quadrupled its staff in the past year to 150 people, and it did so by bootstrapping itself, with no outside investment. Some rivals have anonymously accused Storm8 of cheating in its marketing tactics, using unfair tricks such as automated bots. But Tam denies that and says the company has earned all of its users.

And while other mobile game publishers are selling out, Tam is positioning the company so that it can stay independent and jump fast on the latest trends in mobile games. The company recently launched its Bubble Mania arcade shooter game (a fresh genre for Storm8), and it hit a million downloads in just three days with zero dollars spent on marketing. We caught up with Tam in a recent interview. Here’s a transcript of our talk.

GamesBeat: I wondered if you could talk about the beginning of Storm8, how you guys got together and what prompted you to form the company.

Perry Tam: We started back in March of 2009. At the time, I was working at Facebook on the payments team, building their credits system. The whole Facebook credits system was part of my work back in those days. We saw that social gaming was really taking off on the Facebook platform. Social games back in early 2009… It was basically just Mafia Wars. It was even before FarmVille happened. But we already could see that social games really worked. Games were so much more fun when you played with friends, and how these games worked, at the time, was totally new.

Also, the iPhone had just come out a short time before. They’d opened up the software development kit (SDK) and opened up the platform for people to start making apps for the App Store. We looked at the iPhone and said, wow, this is going to change how people interact with their mobile devices. This is a game-changing device. So we combined those two ideas, social games and mobile — it was a great way to bring social games to people — and we formed Storm8. We added a couple of other people, I dragged a few people from Facebook, and we formed this company. We literally started out in my living room.

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Now we have 150 people. In fact, we just quadrupled in size last year, and we’re on track to double it this year. Right now we occupy half of a building, about 30,000 square feet, but we recently signed a lease, starting this October, to occupy the full 50,000 square feet of the building. There’s a lot of room for us to grow even bigger. That’s where we are. So I think you’re aware of the million-dollar day we had last year. We also announced recently that we have more than 300 million downloads across 100 million devices in our network. Most recently, with the Bubble Mania launch, we announced that we have over six million daily active users (DAU) in our network.

GamesBeat: That’s all been pretty organic, right? You’ve grown it all from the ground up.

Tam: It’s not just organic. It’s also strongly bootstrapped, as far as funding the company. We have no outside capital supporting us. Every single dollar that we spend is our own money that the company made. We haven’t done any acquisitions, so every hire that we get is organically grown.

GamesBeat: Is everybody located in the one Redwood Shores area, or do you have other offices now?

Tam: No, everyone is in one area, in this office. We don’t have other offices elsewhere. We believe that it’s very important for us to put everyone under the same roof, for multiple reasons. First and foremost, we care about our culture. If we start building offices outside here, it gets harder to communicate that culture to those teams. Second, there’s the speed of development. Our dev cycle is very short. In order for us to execute that fast, to create a high-quality game at a fast pace, we need people to be paying attention all the time. They need to be sitting next to each other. They need to share ideas. We need to solve problems as soon as possible. Having everyone under the same roof is very important to us.

GamesBeat: As you get bigger, as you expand, what are your priorities? How do you choose to expand? There’s a lot of different strategies you could pursue. A lot of your rival companies have already sold out, right? Like ngmoco, they’re part of DeNA now. Funzio was just acquired by Gree for $210 million. Zynga has bought a lot of companies as well. But you’ve deliberately chosen to stay independent here.

Tam: Our strategy is definitely to stay independent. From our perspective… Some things might make sense to grow the company faster. We’ve self-funded, we haven’t raised funding. But with this kind of structure, we have a lot of freedom. We control our own destiny. That’s a good thing in terms of growing the company for us.

GamesBeat: What about the kinds of platforms you’re making games for?

Tam: We’re constantly looking to expand on the game front. Different genres of games. We can talk about Bubble Mania in a second, which is a totally new genre of game that we’re coming to. That’s one way to expand. The other way is onto different platforms. We’ve always pushed into different platforms. For example, we came to iOS really early, back in 2009. We went to Android in 2010. That was before anyone offered a lot of competition there. We also launched with Amazon just earlier this year. That’s another platform expansion. We’re constantly looking to work on other platforms as they become a significant part of the mobile ecosystem. The one thing that I want to stress here is that we do have a fairly strict focus on mobile. Anything that’s mobile-related, we’ll pay a lot of attention to it.

GamesBeat: Tell me more about the Amazon launch. You had a pretty good first month. How is it going now?

Tam: It’s going really well. We were a launch partner with them on the in-app purchases. We integrated our games with their in-app purchases and the first month was amazing for us. I think we made over $700,000 dollars in the first month of integration. Ever since then, we’re constantly seeing very good traction on the Amazon platform.

GamesBeat: They’ve got an event they scheduled for September 6. I wonder if they’re going to get into the phone business there…

Tam: [laughs] Yeah, I’m eager to see what they’re going to share in September. Any mobile devices that they’re creating will definitely be a win for the mobile ecosystem.

GamesBeat: Once you get really big, people like to take shots at you. You guys are almost in that category now. I could put these questions in the category of “things your competitors say about you.” One is, a lot of the games look pretty generic, I guess? They look like clone games. A lot of Storm8’s games look like clones. Do you have a response to that?

Tam: Sure. I want everyone out there to understand… We’re not a one-trick pony here. We’re actually very multitalented. I’d like to point out that when we first started in 2009, we started with the Storm8 brand, which… We made RPG games. And then in 2010 we started another brand called TeamLava, and that makes all the Story games that people really enjoy. Restaurant Story, Farm Story. And then in 2011, we opened another brand called FireMocha, which makes core games. They combine the TeamLava presentation with the Storm8 RPG game mechanics. So that’s again another example of us reinventing ourselves.

In 2012, we’ve come up with two different new genres that we’re stepping into. One is called Shark Party, which holds our casino games. We have two games right now underneath that brand. One is Slots and the other is Poker. That’s a totally new genre for us. It’s not something that we’ve done before, but we’re stepping into that. And then most recently is this Bubble Mania game that we shared with you early on. That, again, proved to everyone that we can consistently step into new genres and we can really make use of that. The way that I think we’re different, in terms of making those games, is when we decide to go into a genre, when we decide to make a new game, we always keep in mind that we want to make the best game in that category. I think a lot of companies out there that try to clone other people’s games, they don’t have that in mind. Their job is just to clone. For us, our job is to make it the best in that category. When we made Bubble Mania, we put a lot of attention into the details. I have to give a lot of praise to the team for making it so polished. It’s the best bubble-shooting game on mobile, period. That contributed a lot to its success, on top of every other important asset that we have. Our platform technology allows us to create games of a pretty high quality at a much lower cost.

GamesBeat: Another category where competitors complain about you is… Your games grow so fast that you much be using bots. Or you must be promoting them with armies of people in other countries or something like that.

Tam: [laughs] Right. It’s a very interesting comment there. I don’t know if you’re aware that there was a question on the forums that asked about that…

GamesBeat: Yeah, I saw that. [Your co-founder] William [Siu] put up an answer to that, right?

Tam: Exactly. I think we’ve done a great job of answering that question. [Editor’s note: Perry added later, “I did want to quickly come back to your question about bots. In case my answer wasn’t clear, Storm8 doesn’t use bots and never has. We drive downloads as fast as we do by building great games and marketing them through our proprietary network of 6M+ daily active users (DAU).]

Basically, over the years we’ve built up this network of users. More than six million daily active users playing all our games, every single day. I’d point to Bubble Mania. We announced that we’ve accumulated over one million downloads in three days, and we’ve done that with zero marketing dollars. To be honest, if you use bots, you still have to spend some money on it. We haven’t spent any. That kicks the bot thing out of the picture. Nobody can do that. The key thing here is, we really leverage our DAU, our network, actively. As William pointed out, if you have six million DAU, you need only one percent of them to get interested in the game, and you’ve got 60,000 installs right away.

Our conversion rate is much better than that, because our users are very targeted. They all love social games. They have a certain expectation when it comes to TeamLava games, because we’ve trained them that high-quality games really matter. They have high expectations for every game we release. When we put a game in front of them, they say, great, I’ll try it out. That’s very important for everyone to understand. It’s the reason why Storm8 is doing better in this space. It’s because we’ve built up this network. To give some more color to that… If a competitor, who does not have this network, would want to buy those users, using paid user acquisition, what it boils down to is that it takes at least, maybe two dollars, per download to buy those. Let’s say the game’s ARPPU is one cent. If it takes you two dollars to get a user and the (average revenue per paying user) ARPPU is one cent, you need 200 days to recoup that cost, assuming that the user even stays that long. Most people don’t stay for 200 days, so it’s a losing proposition for a lot of our competitors to do user acquisition. We just get it for free.

GamesBeat: That amount of users is enough to push a game into the top 25, I suppose? The number of referral users you get from your own games.

Tam: Yeah. From our perspective, it’s not about the ranking. It’s about whether our users really like the game. Yes, we have this cross-promotional marketing power, but at the same time, we pay a lot of attention to make sure that we have the right users for the game. By doing that, by creating games we think our users will like… It makes more sense as far as cross-promoting with them.